Labour and the global crisis sharing the burden ___ shaping the

Call for Papers
Labour and the global crisis
sharing the burden (!) shaping the future (?)
Analysis, Short-Term Stabilisation and Long-Term Options
VI. Global Labour University Conference, Berlin, 14-16 September 2010
at the
Berlins School of Economics and Law
By 2008 the financial crisis that broke out in the U.S. in 2007 had developed into a full-scale
global, systemic financial crisis which ignited a deep crisis in the real economy around the
world. Industrialised countries like the USA and the members of the European Union as well
as developing countries around the world have all been affected by the crisis. Countries which
had deregulated their financial markets to a great extent – like the USA –, countries dependent
on exports – like Germany – and economies with high current account deficits and high
foreign debt – like the Baltic States –suffered the most. World wide fiscal stimulus packages
together with expansionary monetary policy and bailouts of financial institutions were able to
limit the rapid contraction of production in most of countries and to stabilise the situation.
However, there seems to be no source which could re-establish the (in many cases already
low) growth rates which existed before the crisis. A scenario of long-term stagnating GDP
growth in developed countries and insufficient growth in developing countries appears very
likely. At all events, more and more countries are turning to severe austerity programs with
wage, social security and public service cuts to pay for the crisis. After looting the state for
the sake of the financial system some countries are now dismantling the welfare state as we
know it.
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Labour markets have been hit in a fundamental way by the crisis. Unemployment rates
increased sharply all over the world and are set to continue rising in the coming years. If the
world economy or a significant number of countries fall into long-term stagnation, then
unemployment and the associated social consequences, such as poverty, will become an
increasing problem. During the last few decades, labour markets have been deregulated in
country after country and precarious working conditions have become increasingly common.
One of the dangers that this could lead to is a deflation triggered by wage cuts, a development
that could push the world economy in a constellation comparable with the 1930s. Standard
labour market instruments can help to mitigate the crisis, but are on their own totally
insufficient to create adequate employment.
Financial markets are still not regulated. Despite the deep economic crisis so far wide spread
anger among people has not translated into major policy shifts. After the near breakdown of
the financial system in 2007 and 2008 the casino opened again. Bubbles in the stock market,
the real estate market, the markets for natural resources and food or foreign exchange markets
are likely as long as no fundamental changes are implemented. Furthermore, such bubbles are
no longer likely lead to short-term booms in the real economy.
Organised labour has mainly been consulted by governments on how to share the pain, but not
on how to shape the future. This raises the question of whether the crisis will accelerate the
decline of organised labour and the deterioration of the welfare state or whether it can be
made into an opportunity for labour to regain the policy initiative.
Given these perspectives the following topics will be discussed at the conference.
1. Analyses of the crisis and short-term options
A review and understanding of the present situation is needed to develop strategies for
improving the situation. How can the current crisis be explained, how will economic and
social developments unfold in the near future, what will be the result of the creation of an
enormous amount of liquidity by central banks and how do we judge the sustainability of a
highly expansionary fiscal policy? In terms of short-term economic options, have fiscal
policy, monetary policy and the stabilisation of the financial system through governmental
bailouts been the right response? What are the short-term and medium-term policies that can
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stabilise the economy in the interest of employees and at the same time open options for more
fundamental reforms?
2. Employment Developments and Labour Market Regulations after the Crisis
Since the beginning of the crisis many thousands of people both in developed and developing
countries have lost paid employment because their employers closed down production or used
the crisis to reduce employment. People have been made unemployed, and in many cases they
have not received unemployment benefits, and household poverty has increased. As in
previous recessions, labour market conditions for workers deteriorated in terms of wages,
working conditions and employment security. Without a drastic change in policy, any
recovery is likely to be accompanied by an uneven increase of employment in different
regions of the world and, within countries, for different groups of employees according to age,
race, gender and skill levels. There is also likely to be an increasing proportion of jobs that are
not fully integrated in social security regulations, of low-paid jobs and informal jobs. De-
regulation and informalisation look set to increase in coming years. In order to understand the
impact of the crisis on employment and the position of workers and trade unions, it is
necessary to study the role of the de-regulation and the re-regulation of labour markets.
3. Changes in the global economy and power structures and global governance reforms
The neoliberal process of globalisation included global economic processes without sufficient
regulation. This was reflected in unstable international financial networks, high current
account deficits, chaotic currency fluctuations, and mercantile strategies in some countries to
promote exports. The scope of democratic decision making declined, civil society
organisations like trade unions, community groups and political parties lost influence vis-à-vis
global financial markets, multinational companies and international trade regimes.
These processes took place against the background of changes in global power structures.
Important new players like China, India, Brazil and others entered the stage. Without a
fundamental reform in global governance, including a reform of existing international
institutions, sustainable stability cannot be achieved. However, without integrating the new
powers and giving more influence to countries in the Southern hemisphere and accepting the
relative decline of the role of the US and Europe, a new global governance structures cannot
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be developed. The neoliberal globalisation project imposed policies on many countries in the
Southern hemisphere in the tradition of the Washington Consensus, and some of these
countries followed this pattern blindly. Also these types of policy, which were not very
successful in promoting development, have to be reformed in a new global governance
structure. However greater influence of Southern governments does not automatically imply
more global justice for people. A more inclusive power sharing model among states is fully
compatible with a decline of participation and influence of ordinary citizens within states.
4. The financial system, distribution and growth
Financial systems in the narrow sense were responsible for the outbreak of the deep crisis of
neoliberal globalisation. This was due to an increase in the securitisation of international
claims, from derivatives and financial products of all kinds, to the formation of an unregulated
shadow banking system caused by the risky and short-term orientation of all parties within the
financial system, by pro-cyclical regulations like Basel II and fair-value accounting, and by
destabilising incentive systems for managers. Financial systems should support and promote
the real economy; their function should again become subordinate to the real economy. Since
the 1970s wage shares in income have been declining. This development is also closely
related to the increased role and power of the financial system in recent decades. At the same
time, as a result of the deregulation of labour markets, the wage structure became much more
unequal. The falling wage share and the changing wage structure (and in many countries
government tax and expenditure policies) have led to rising inequality in the distribution of
income and wealth. As a result of a the reduced ability to finance consumption out of income,
this has led to unsustainable credit-financed consumer booms in some countries. Sustainable
development requires that distribution become more equal again.
5. Social safety nets and the public sector
Neo-liberal developments in recent years have weakened the role of the public sector through
the privatisation of former state-owned companies and public services of all kind. At the same
time, the social safety net in many countries has been at least partly dismantled. A new
relationship between governments and private enterprise that provides more socio-economic
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security to workers is required for more stable development. Governments have to produce
and (once again) deliver more public goods, ranging from education to public utilities. Models
of solidarity economies and new models of urban management also have an important part to
play in the much needed new relationship between the public and private sector.
6. Financial systems, corporate governance and multinational companies
In recent decades stakeholder capitalism has developed into a short-term orientated
shareholder capitalism dominated by multinational companies. Multinationals now organise
their value-chains around the world according to short-term profit motives. This has not only
reduced the role of trade unions in companies, but has also led to obscenely high management
salaries and an increase of low-paid and precarious jobs. Without a fundamental reform of
corporate governance and, along with it the reform of financial markets, a sound development
in the interest of employees seems highly unlikely.
7. Looking beyond the horizon – are there fundamental options?
There was a crisis before the crisis. Billions of people lived in abject poverty and insecurity
despite an unprecedented accumulation of global wealth. Even without the financial crisis the
global economy did not meet the criteria of social and environmental sustainability. The
depressing track record of all previous state- and party-led alternatives to capitalism has
resulted in widespread doubts about fundamental alternatives. The willingness of policy
makers to finance a nearly unconditional bail out of the banks and the arrogant complacency
of the financial industry cannot be understood without the hegemony of the conservative view
that today’s world is by and large the end of history. The lack of alternatives guarantees an
unprecedented stability even during the worst crisis in a century. Today’s global social and
environmental crises require imagining new forms of change beyond the state- or market-
centred solutions of the 20th century.
……
If you would like to offer a paper in one of these areas, please send a short, half-page abstract
by 15 April 2010 to:
gluconf@global-labour-university.org
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